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Rajasthan High Court – Jaipur
Commissioner Of Income Tax Anr vs Income Tax Settlement Ors on 7 April, 2025
[2025:RJ-JP:14948-DB]
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Civil Writ Petition No.19485/2013
1. Commissioner Of Income Tax (Central), Jaipur.
2. Joint Commissioner Of Income Tax, Central Range-Jaipur,
Income Tax Department, Central Revenue Building, Jaipur
----Petitioners
Versus
1. Income Tax Settlement Commissioner, New Delhi.
2. M/s. Career Point Infosystems Ltd., 112-B, Shakti Nagar,
Chambal Garden, Kota, Rajasthan.
3. Shri Pramod Kumar Maheshwari, 112-B, Shakti Nagar,
Chambal Garden Road, Kota, Rajasthan.
4. Shri Om Prakash Maheshwari, 112-B, Shakti Nagar,
Chambal Garden Road, Kota, Rajasthan.
5. Shri Naval Kishore Maheshwari, 112-B, Shakti Nagar,
Chambal Garden Road, Kota, Rajasthan.
----Respondents
For Petitioner(s) : Mr.Siddharth Bapna, Adv. with
Mr.Meyhul Mittal, Adv.
For Respondent(s) : Mr.Abhishek Bhardwaj, Adv.
HON’BLE MR. JUSTICE AVNEESH JHINGAN
HON’BLE MR. JUSTICE MANEESH SHARMA
JUDGMENT
RESERVED ON :: :: :: 02/04/2025
PRONOUNCED ON :: :: :: 07/04/2025
AVNEESH JHINGAN, J:-
1. The revenue has filed writ petition assailing the order
of the Income Tax Settlement Commission (for short ‘the
Commission’) dated 31.03.2013 only to the extent of
granting immunity to the private respondents from
prosecution and penalty.
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2. On 04.12.2009 search was conducted on premises of
Career Point Group, respondent No. 2(hereinafter referred to
as ‘company’). The respondent Nos.3, 4 & 5 are the
directors of the company. The incriminating material was
seized during the search indicating that the company was
claiming bogus expenses, not complying with the provision
of TDS and siphoning-off the funds for purchase of
immovable property. There was evidence with regard to
bogus payments to facility member. Statement of Shri Om
Maheshwari was recorded. Consequent to the search
proceedings, the private respondents filed an application
under Section 245C(1) of the Income Tax Act, 1961
(hereinafter ‘the Act’) before the Commission. Vide order
dated 31.03.2013 the Commission finalized terms and
conditions of settling cases of the company and the
directors. Immunity was granted from the prosecution and
penalty. The present writ petition is filed aggrieved only of
immunity granted for prosecution and penalty.
3. Learned counsel for the petitioner submitted that the
figures offered by the private respondents were not
accepted by the Commission and were enhanced.
Contention is that the private respondents failed to make full
and true disclosure of the income and the Commission erred
in granting immunity for prosecution and penalty.
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4. As per contra, the private respondents had made true
& full disclosures, cooperated during the settlement
proceedings and the immunity was rightly granted.
5. The relevant portion of Section 245C(1) of the Act and
245H of the Act are quoted below:-
“245C(1). An assessee may, at any
stage of a case relating to him, make
an application in such form and in
such manner as may be prescribed,
and containing a full and true
disclosure of his income which has
not been disclosed before the
Assessing Officer, the manner in
which such income has been
derived, the additional amount of
income-tax payable on such income
and such other particulars as may be
prescribed, to the Settlement
Commission to have the case settled
and any such application shall be
disposed of in the manner
hereinafter provided.
245H(1). The Settlement
Commission may, if it is satisfied
that any person who made the
application for settlement under
section 245C has co-operated with
the Settlement Commission in the
proceedings before it and has made
a full and true disclosure of his
income and the manner in which
such income has been derived, grant
to such person, subject to such
conditions as it may think fit to
impose for the reasons to be
recorded in writing, immunity from
prosecution for any offence under
this Act or under the Indian Penal
Code (45 of 1860) or under any
other Central Act for the time being
in force and also (either wholly or in
part) from the imposition of any
penalty under this Act, with respect(Downloaded on 18/04/2025 at 11:30:42 PM)
[2025:RJ-JP:14948-DB] (4 of 10) [CW-19485/2013]to the case covered by the
settlement.”
6. Chapter XIXA of the Act deals with settlement of cases
by providing a forum of Commission. An assessee by making
full and true disclosure of undisclosed income and the
manner it was derived can settle the matter without going
through the procedure of assessment or reassessment and
appeals.
7. Under section 245C(1) of the Act by making an
application in a prescribed form, the assessee at any stage
of the case by making full and true disclosure of the income
not disclosed to Assessing Officer (hereinafter ‘AO’) and also
the manner of deriving the income now disclosed, may get
the case settled before the Commission.
As per sub-section (2) the application should be
accompanied by a prescribed fee.
Sub-section (3) provides an application made under
sub-section (1) cannot be withdrawn.
Under sub-section (4) the assessee is obligated to
intimate the AO in a prescribed manner of having filed an
application before the Commission.
8. Section 245D prescribes procedure to be followed while
dealing with an application made under Section 245C.
Under sub-section (1) within seven days of filing of
application the Commission has to issue notice to the
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applicant to show cause why application should be allowed
to proceed and after granting an opportunity of hearing by
passing an order, allow the application to proceed or reject
it.
Proviso provides the deeming fiction that in case
application is not decided within fourteen days from the date
of receipt, it shall be deemed to have been allowed to
proceed.
Sub-section (2) mandates the supply of order passed
under section 245D(1) to the applicant and the
Commissioner.
As per sub-section (2B), in cases where the application
is allowed to be proceeded, the Commission within thirty
days of receipt of application shall call the report from the
Commissioner. The report is to be furnished within thirty
days of receipt of communication from the Commission.
Under sub-section (2C) on the basis of the report
received, the Commission may pass an order declaring the
application to be invalid. The copy of order is to be supplied
to the applicant and to the Commissioner.
Proviso to sub-section stipulates that the order shall
not be passed without granting an opportunity to the
applicant.
Under sub-section (3) the Commission may call the
record in cases where the application has not been declared
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invalid under sub-section (2C). Commission if after
examination of record is of the opinion that further enquiry
or investigation is necessary, the Commissioner may be
directed to furnish the report after enquiry or investigation.
Under proviso to sub-section (3) on failure of the
Commissioner to furnish report within the stipulated time
the Commission can proceed to pass an order without
report.
Under sub-section (4) the Commission in accordance
with provisions of the Act can pass such order as it thinks
fit, on the matters covered by the application or relating
thereto even if not covered by the application but refer the
application in report. The order is to be passed after
examining the report of the Commissioner (if filed),
evidence and providing an opportunity to the applicant and
the Commissioner.
Sub-section (5) obligates the members of the
Commission that before passing order under sub-section (4)
the material brought on record shall be considered.
Sub-section (6) stipulates for providing the term of the
settlement in an order passed under sub-section (4). The
manner of payment of sum due and other matters to make
the settlement effective is to be mentioned. The order has to
provide that in case of settlement having been obtained on
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the basis of fraud or misrepresentation of the facts, it shall
be void.
9. Section 245H empowers the Commission to grant
immunity from prosecution under the Act or Indian Penal
Code or any other Central Code and from imposition of
penalty under this Act. The immunity is granted by
Commission on being satisfied that applicant cooperated
during the proceedings, made full and true disclosure of
income and manner in which the discosed income was
derived.
10. There are two requirements under Section 245C(1):-
(i) full and true disclosure of the income not disclosed to AO
and (ii) the manner the income disclosed was derived. The
failure of the applicant to comply with the twin condition
renders the application invalid.
11. The Supreme Court in Ajmera Housing Corporation
and Another Vs. Commissioner of Income Tax reported
in [(2010) 326 ITR 642] held as under :-
“27. It is clear that disclosure of “full
and true” particulars of undisclosed
income and “the manner” in which
such income had been derived are
the prerequisites for a valid
application under Section 245-C(1)
of the Act. Additionally, the amount
of income tax payable on such
undisclosed income is to be
computed and mentioned in the
application. It needs little emphasis
that Section 245-C(1) of the Act
mandates “full and true” disclosure(Downloaded on 18/04/2025 at 11:30:42 PM)
[2025:RJ-JP:14948-DB] (8 of 10) [CW-19485/2013]of the particulars of undisclosed
income and “the manner” in which
such income was derived and,
therefore, unless the Settlement
Commission records its satisfaction
on this aspect, it will not have the
jurisdiction to pass any order on the
matter covered by the application.”
12. The picture emerges that the Commission has
jurisdiction to conclude the proceedings on a valid
application. The failure of the applicant to make full, true
disclosure of the income not disclosed to AO and the manner
such income was derived render application invalid and the
Commission losses jurisdiction to entertain the application
and to pass an order under Section 245D (4). The validity of
application can be gone into at initial stage under Section
245D(1), then under Section 245D(2C) after receipt of
report from Commissioner and also at time of passing order
under Section 245D(4).
13. For the Commission to grant immunity under Section
245H there are three requirements:- (i) full and true
disclosure of the income not disclosed to AO; (ii) the manner
in which the income was derived and (iii) that the applicant
cooperated in the proceedings before the Settlement
Commission. The Commission on being satisfied that
applicant cooperated during the proceedings coupled with
the fulfillment of two conditions as required under Section
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245C may grant immunity to the applicant from prosecution
and penalty subject to the conditions it may deems fit.
14. The proceedings filed by the private respondents were
admitted under Section 245D(1) on 22.09.2011 and by
order dated 08.11.2011 the application was declared not to
be invalid. The application culminated in order dated
31.03.2013 whereby the terms and conditions for
settlement were determined. It would be relevant to
mention that the portion of the order fixing the terms and
conditions of the settlement has attained finality.
15. The acceptance of the application bring us to the
obvious conclusion that the first two conditions of section
245H which are common to the pre-requisite of section
245C(1) have been complied with.
16. The contention of counsel for the petitioner that there
was failure of the private respondents to make a full and
true disclosure under Section 245C, deserves rejection. The
revenue accepted the order of the Commission whereby the
applications have been allowed and the challenge is limited
to grant of immunity. Meaning thereby the satisfaction of
Commission that two pre-conditions of Section 245C(1)
were complied is not in dispute. The Commission has
recorded a satisfaction that the applicant cooperated during
the settlement proceedings and there is no challenge to this
finding. In absence of challenge to fulfillment of three
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conditions required under Section 245H, the argument that
there was no true and full disclosure of income does not
arise.
17. No case is made out for interference in the impugned
order. The writ petition is dismissed.
(MANEESH SHARMA), J (AVNEESH JHINGAN), J
Himanshu Soni/reserved
Reportable:- Yes
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